1) Wright, Inc

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1) Wright, Inc. has an incentive compensation plan under which the sales manager receives a bonus equal to 10 percent of the company's income after deductions for bonus and income taxes. In- come before bonus and income taxes is $400,000. The effective income tax rate is 30 percent. How much is the bonus (rounded to the nearest dollar)?

a.    $40,000

b.   $30,108

c.    $28,000

d.   $26,168

 

2. Washington Corporation provides an incentive compensation plan under which its president is to receive a bonus equal to 10 percent of Washington's income in excess of $100,000 before deduct- ing income tax but after deducting bonus. If income before income tax and bonus is $320,000 and the effective tax rate is 40 percent, the amount of the bonus should be

a.    $20,000.

b.   $22,000.

c.    $32,000.

d.   $44,000.

 

3.During the first week of January, Sam Jones earned $200. Assume that FICA taxes are 7.65 per- cent of wages up to $50,000, state unemployment tax is 5.0 percent of wages up to $13,000, and federal unemployment tax is 0.8 percent of wages up to $13,000. Assume that Sam has voluntary withholdings of $10 (in addition to taxes) and that federal and state income tax withholdings are$18 and $6, respectively. What amount is the check, net of all deductions, that Sam received for the week's pay?

a.    $150.70

b.   $141.70

c.    $140.10

d.   $155.20

 

4. During the first week of January, Sam Jones earned $200. Assume that FICA taxes are 7.65 per- cent of wages up to $50,000, state unemployment tax is 5.0 percent of wages up to $13,000, and federal unemployment tax is 0.8 percent of wages up to $13,000. Assume that Sam has voluntary withholdings of $10 (in addition to taxes) and that federal and state income tax withholdings are

$18 and $6, respectively. What is the employer's payroll tax expense for the week, assuming that Sam Jones is the only employee?

a.    $6.32

b.   $26.90

c.    $10.00

d.   $19.05